Question

Answer the following questions on the basis of the data given below.

Jamshedpur Electronics sells Television sets and IPods through three retail outlets located in Bistupur, Sakchi and Kadma. The table below gives the sales figures (in Rupees thousand) of these two products for the months of January, February and March.

Note: Units ordered = Units sold + Ending inventory - Beginning inventory. All other things remain constant, and all Rupee figures are in thousands.

In the period from January to March, Jamshedpur Electronics sold 3150 units of Television, starting with a beginning inventory of 2520 units and ending with an inventory of 2880 units. Profits are 25% of the cost price, uniformly. What was the value of the order placed (in Rupees thousand) by Jamshedpur Electronics during this three month period?

• A. 2808
• B. 26325
• C. 22320
• D. 28080

Hint:

First find the total units ordered using the inventory formula, then convert the selling price per unit into a cost price per unit before valuing the order.

Answer 1

The Correct Option is D

Step 1: Find the number of units ordered.
The stock rule given is units ordered = units sold + ending inventory - beginning inventory. This is just common sense: whatever units left the shelf (sold) or are still sitting there at the end (ending inventory) must have come from somewhere, either they were already there at the start (beginning inventory) or they arrived through a fresh order.
Here, units sold = 3150, ending inventory = 2880, beginning inventory = 2520.
Units ordered = 3150 + 2880 - 2520 = 3510.

Step 2: Find the selling price per Television unit.
Add up the Television sales value (in Rupees thousand) from every area and every month in the table: Bistupur gives 900 + 1050 + 1200 = 3150, Sakchi gives 1800 + 2100 + 2400 = 6300, and Kadma gives 6300 + 7350 + 8400 = 22050. Adding these three areas: 3150 + 6300 + 22050 = 31500.
The total number of Television units sold over the same three months is 3150 (given).
So selling price per unit = total sales value / total units sold = 31500 / 3150 = 10 (Rupees thousand per unit).

Step 3: Convert selling price to cost price.
We are told profit is 25% of cost price, so selling price = cost price + 25% of cost price = 1.25 times cost price.
Cost price per unit = selling price / 1.25 = 10 / 1.25 = 8 (Rupees thousand per unit).

Step 4: Find the value of the order placed.
An order is placed and paid for at cost price, not selling price, because at this stage the retailer is the one buying the stock.
Value of order placed = units ordered x cost price per unit = 3510 x 8 = 28080 (Rupees thousand).

Why the other options are wrong:
2808 is what you get if you drop a zero or forget to multiply the units ordered by the cost price at all. 26325 and 22320 come from valuing the order at the selling price of 10, or at some other wrongly adjusted price, instead of the correct cost price of 8.

Final Answer:
The value of the order placed is Rupees 28080 thousand.
\[ \boxed{28080} \]